Ponquogue Acquisitions, LLC v People's United Bank

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Ponquogue Acquisitions, LLC v People's United Bank 2013 NY Slip Op 32139(U) August 28, 2013 Supreme Court, Suffolk County Docket Number: 13-7296 Judge: Thomas Whelan Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] INDEX NO. 13-7296 SUPREME CiOURT - STATE OF NEW YORK I.A.S. PART 33 - SUFFOLK COUNTY PRESENT: Hon. THOMAS F. WHELAN Justice of the Supreme Court ORDER AMENDING PRIOR ORDER Determining Motion Seq. #002 MOTION DATE 6/3/13 711211 3 ADJ. DATES Mot. Sea. # 002 - MOTD CDISPqNO d ............................................................... PONQUOGUE ACQUISITIONS, LLC, X CHRISTOPHER THOMPSON, ESQ. Attys. For Plaintiff 33 Davison Ln. East West Islip, NY 11795 Plaintiff, -against- PEOPLE S UNITED BANK, successor by merger : to Bank of Smithtown, Defendant. LYNCH & ASSOC. Attys. For Defendant 462 Seventh Ave. New York, NY 100 18 : X IJpon reading the letter application of defendant s counsel dated August 2 I , 20 13 for the issuance ofan amended order correcting certain typographical errors, principally in the description of the parties, in the order of this court dated August 6, 2013 which granted, in part, the defendant s motion (#002) for dismissal of the plaintiffs complaint, it is ORDERED that the order of this court dated August 6, 2013 which granted, in part, the del endant s motion (#002) to dismiss the plaintiffs complaint, is hereby amended to read as follows: -: p Upon the following papers numbered 1 to 7read on this motion by the defendant for dismissal of the complaint Notice of Motion/Order to Show Cause and :supporting papers I - 3 ; Notice of Cross Motion and supporting papers , Answering papers 4-6 ; Replying papers 7 ; Other -; ( i o n ) it is. ORDERED that this motion (#002) by the defendant for dismissal of the complaint pursuant to CPI,II 32 1 1(a)( 1); ( 5 ) and (7) is granted only to the extent that the First cause of action set forth in the coin p 1ai n t i s d i snii ssed . The plaintiff coiiiiiienced this action to recover damages fkom the defendant by reason of its breach of an agreement to sell to the plaintiff two promissory notes. These notes were secured by two s e p a r a t c mortgages given on November 30,2007 by Ponquogue Manor Construction, LL,C, a non-party to this action, that were guaranteed by one of its principals. The first of the two November 30, 2007 [* 2] Ponquogue Acquisitions. LLC v People s United Bank Index No. 13-7296 Page 2 mortgages was a consolidated mortgage that secured a building loan in the amount of $2,900,000.00. The second mortgage secured a mortgage of the same date in the amount of $1,000,000.00. These two mortgages were the subject of a prior foreclosure action instituted by the defendant in this court in which a judgment of final foreclosure and sale issued on November 11, 2012. The defaults in answering of the defendant wiortgagor and its guarantor were adjudicated on July 6, 20 1 1, when the hank s motion for an order of reference upon default was granted. Although the obligor defendants in that action twice moved for a vacatur of such defaults, the applications were denied. Following its receipt of the November 11, 2012 judgment of foreclosure and sale, the bank scheduled a judicial sale of the property for March 14, 20 13. On March 13, 201.3, the plaintiff (commencedthis action against the defendant. The plaintiff is a limited liability company that was formed in July of 201 1 by one or more of the principals of the obligor defendants in the foreclosure action described above. The plaintiff was formed for the purpose of purchasing the notes in an effort to take the loans out of any alleged default status (see 7 10 of the plaintijl s complaint attached to the moving papers). In furtherance of such purposes, the plaintiff allegedly engaged the defendant in a condractual and/or fiduciary relationship. In the complaint served herein, the plaintiff seeks money damages from the defendant under principles of contract law and quasi contract (unjust enrichment). In addition, the plaintiff seeks damages in tort for the del-cndant s purported breach of fiduciary duties and conversion and equitable relief in the form of a constructive trust. In its final cause of action, the plaintiff seeks preliminary and permanent iiijunctive relief staying the sale of the premises that were the subject of the prior commenced foreclosure action and enjoining the defendant s transfer of the mortgage notes to anyone but the plaintiff. All of the claims advanced in the complaint are premised upon claims that the defendant breached a purported November 9, 201 1 agreement executed only by a nominee of the plaintiff, in which, the defendant was to sell to the plaintiff the two mortgage notes that were secured by the mortgages foreclosed in the prior foreclosure action. This purported agreement was allegedly the centerpiece of the plaintiffs objective to take the loans out of any alleged default status (id). Allegations ofthe plaintiff s possession of either a present or antecedent legal interest in the mortgaged premises are not advanced in the complaint. Simultaneously with the commencement of this action, the plaintiff moved (#001) for a preliminary injunction restraining the dcft-ndant and all others from proceeding with the scheduled judicial sale which took place as scheduled due to the absence of a stay or temporary restraining order precluding same (see Order dated May 30, 201 3). The defendant opposed the motion on grounds of mootness, as the sale of i.he mortgaged premises proceeded as scheduled on March 14, 2013. In contesting the merits of the plaintiff s motion, defense counsel argued that the plaintiff was not entitled to prcliininary injunctive relief, since, among other things, there was no consummated agreement signed by the defendant to sell the notes to the plaintiff. Although, the plaintiff acknowledged that the factual landscape of its motion was altered by the March 14,20 13 judicial sale of mortgaged premises, it nevertheless continued to pursue the application [* 3] Ponquogue Acquisitions, LLC v People s United Bank Index No. 13- 7296 Page 3 i or preliniinary injunctive relief since the mortgaged premises were purchased at the public sale by the defendant bank. Plaintiffs counsel argued that preliminary injunctive relief was not moot since the gravamen of the plaintiff :; claims in this action was + itsinterest in purchasing the two (2) notes and that such interest * had been hampered by the Defendant and that the Defendant has allowed the scheduling of a foreclosure sale of the underlying collateral that secures the two (2) notes in question (see Order dated May 30, 2013, pages 2-3). The court, however, rejected these claims and denied the plaintiff s motion (#001) for preliminary injunctive relief in its March 30,2013 order. The court found that the plaintiff failed to establish a likelihood of success as it did not establish the existence of any agreement on the part of the defendant to sell the mortgage notes to the plaintiff (see id., page 3). at By the instant motion (#002), the defendant seeks dismissal ofthe plaintiffs complaint pursuant to CPLR 32 1 l(a)( 1),(5) and (7). The motion is premised upon the following: 1) that the November 201 1 draft agreement for the sale of the notes to the plaintiff, on which it relies to support its pleaded claims of breach and recovery under tort theories.,was never executed by the defendant as required by the statute of frauds; 2) the draft agreement, or its terms, even if enforceable, terminated by its own terms when no closing took place by the time of essence date of November 15,201 1; 3) the plaintiff was never ready, willing or able to close on any date; and 4) the draft agreement, even if enforceable, precluded the remedy of speciiic performance (which is not demanded herein) and the recovery of consequential damages by the plaintiff. For the reasons stated below, the motion is granted to the extent detailed below. To be successful, a motion to diismiss pursuant to CPLR 321 l(a)(l) based on documentary evidence must be grounded upon a bona fide defense asserted by the moving party. Such a motion is properly granted only where the documentary evidence adduced utterly refutes the plaintiffs factual allegations, thereby conclusively establishing a defense as a matter of law (,Tee Choudlzary v First Option Title Agency, 107 AD3d 657,96 J NYS2d 86 [2d Dept 20131; Green v Gross andLevin, LLP, 101 AD3d 10 79, 20 12 WL6684704 [2d Dept 201 21). To succeed on such a motion, the movant must establish that ihe documentary evidence 1.hat forms the basis ofthe motion resolves all factual issues as a matter of law and conclusively disposes of the plaintiffs claim (see AG Capital Funding Partners, L.P. vStateSt. Bank and Trust Co., 5 NY3d 582,590-591,808 NYS2d 573 [2005]; Bua vPurcell& Ingrao, P.C. 99 AD3d 843, 952 NYS2d 592 [2d Dept 20121; Fontanetta v Doe, 73 AD3d 78, 898 NYS2d 569 (2d Dept 20101). To qualify as documentary , the evidence relied upon must be unambiguous and undeniable in a manner like judicial records and documents reflecting out-of-court transactions such as mortgages, deeds and contracts. Documents compiled by parties, such as affidavits, notes, accounts, depositions. correspondence and the like, generally do not constitute documentary evidence within the ambit of CPLR 321 l(a)( 1) (see Granada Condominium IIIAssn. v Palomino, 78 AD3d 996. 913 NYS2d 668 [2d Dept 20101; Fontanetta v Doe, 73 AD3d 78, supra). If the documentary evidence disproves an esseintial allegation of the complaint, dismissal is warranted even if the allegations. standing alone, could withstand a inotion to dismiss for failure to state a cause of action (\e@Peter F. Gaito.4rcltitecture, LLCvSinzone Dev. Coup.,46 AD3d 530,846 NYS2d 368 [2d Dept 20 101). [* 4] Ponquogue Acquisitions, ILLC v People s United Bank Index No. 13- 7296 Page 4 1 Icre, the defendant relies upon the November 9, 201 1 agreement that M ~ not signed by it and S the statute of frauds set forth in General Obligations 5 5-703 to support its claims for dismissal of the plaintiff s complaint pursuant to CPLR3;!1 l(a)(l) and CPLR 321 1(a)(5). GOL 5 5-703(2) provides that [nIcontract for the leasing for a longer period than one year, or for the sale of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged. or by his lawful agent thereunto authorked by writing . That an agreement to purchase a mortgage indebtedness falls within the statutory term of an interest in real property is clear, notwithstanding that a mortgage debt is considered personalty (Sleet1z vSampson, 237NY 69, 142NE 355 [1923]; see Ognenovskiv Wegrnan,275 AD2d 1013,713 NYS2d 594 [4th Dept 20001; see also Barrefti v Detore, 95 AD3d 803,944 NYS2d 166 [2d Dept 20121). The defendant, by its moving papers, established by production of the November 9,201 1 agreement that although the same provided for the signature ofthe dcfendtlnt, as seller, and was executed by the plaintiff s nominee, the agreement was never executed by the dcfcndaut. Since such agreement was one for the purchase ofthe mortgage indebtedness via the purchase of the notes each secured by the separate mortgages, the agreement was not binding upon the defendant and no damages for its breach may be recovered by the plaintiff under theories of contract law. The plaintiff s discussion of the part performance doctrine is thus irrelevant :;ince such doctrine is applicable only to claims for specific f performance not to claims at law of the type asserted herein by the plaintiff (see Zito v County o Suffolk. 106 AD3d 8 14, 964 NYS2d 644 [2d Dept 20131; Sparks Assoc., L L C v North Hills Holding Co. I I , 9 4 AD3d 864,941 jYYS2d 695 [2d Dept 20121). Since, however, the subject agreement, which was not signed by the defendant, is subject to the statute of frauds set forth in GOL Q 5-703(2), the defendant established its entitlement to dismissal of the plaintiffs First cause of action sounding in breach of the November 9. 201 1 agreement, pursuant to CPLR 321 l(a)( 1) and (a)(5). The plaintiffs claim that discovery is necessary in order for it to state opposition to the defendant s motion is rejelzted as unmeritorious (see CPLR 321 1 [d]). The discovery characterized as necessary by the plaintiff relates to documentation allegedly under the control of the defendant or its agents. It allegedly bears upon the issue of whether the defendant intended to be bound by the agreement notwithstanding that it did not sign it (see 77 25-27 of the affirmation of plaintiffs counsel in opposition to defendant s motion). While the absence of a signed writing may not preclude a finding ofthe existence of enforceable contract where there is evidence ofthe parties intent to be bound (see Brighfon Inv., Ltd. v Har-ZVI, 88 AD3d 1220, 932 NYS2d 214 [3d Dept 201 11; Gehn v 55 OrcltardSt., LLC, 29 AD3d 735, 81 5 NYS2d 253 [2d Dept 2006]), the issue of whether the parties intended to be bound is not relevant in cases, such as the instant one, wherein a statute of frauds such as GOL 5-703 imposes the requirement of a writing (see Flores v Lower East Side Serv. Ctr., Inc., 4 NY3d 363, 795 NYS2d 491 [2005], LI contract may he valid even f i t is noi signed by the party to he charged, provided its subject mutter doe., not imnplicntc. LI statute--such cis the statute of fiauds (General Obligations Law $ 5 701) -thcit imposes such a requirement; Priceless Custom Homes, Inc. v O Neill, 104 AD3d 664,960 NYS2d 455 [2d Dept 20131; c f , Zolin v Roslyii Symgogue, 54AD2d 369, 545 NYS2d 846 [2d Dept 19891). The only exception to the statutory requirement of a writing is in those cases wherein the doctrine of part performance is available to the claimant as noted in GOL $ 5-703(4), which doctrine is not f applicable to the claims interposed here (see Zito v County o Suffolk, 106 AD3d 814, supra; but see Firrntm v Wells Fnrgo hlorne Mtge. lunc., 105 AD3d 807, 964 NYS2d 169 [2d Dept 20131). The [* 5] Ponquogue Acquisitions, LLC v People s United Bank Index No. 13- 7296 Page 5 plaintiii s demands for denial ofthe motion pursuant to CPLR 321 l(f) and otherwise are thus rejected as unmcritorious. Dismissal of the remaining causIzs of action set forth in the complaint is denied. The moving papers of the defendant failed to address any of these causes of action whereby the plaintiff seeks to recover money damages under theories ol unjust enrichment, constructive trust, and tort by reason of the clc liLtid;tnt purported breach of fiduciar,y duties and conversion. s I n view of the forgoing, the instant motion (#002) by the defendant to dismiss the plaintiffs complaint is granted only to the extent that the First cause of action is dismissed.

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